Computer and video games have been in existence since the second half of the 20th century. The first graphical computer game was created in 1952 by A. S. Douglas and was a version of Tic-Tac-Toe programmed on an EDSAC vacuum-tube computer which had a cathode ray tube display. The first video game was created about six years later in 1958 by William Higinbotham and was a simulated tennis game for two played on an ordinary laboratory oscilloscope. The first game intended for use on a computer was created by Steve Russell in 1962 and was called “Spacewar!”
The period leading up to the 1990's was dominated by single player games. However, with the rapid development of the internet outside of academic circles in the beginning of the 1990's and the introduction of the game DOOM (id Software, 1993), multiplayer games quickly gained widespread popularity. DOOM allowed for multiple PCs, each operated by a different player, to be connected in a network and, therefore, for each player to have a character present in a single, simulated game world.
The introduction of DOOM contributed greatly to the popularisation of a new genre of games called 3D-shooters or First Person Shooters (FPSs). A common characteristic of these games is that the player's perspective is that of a person holding a weapon of some sort and the play of the game generally involves the killing of enemies which, in the networked form of the game, normally includes other players.
FPS games are today played by hundreds of thousands of players simultaneously playing against each other in thousands of separate games played across thousands of game servers. For the majority of these games no further revenue accrues to the developers of the game once the game software has been sold to the users and to date the only business models that have successfully derived ongoing revenue from the games are sponsored tournaments, advertising-supported community web sites and dedicated game server hosting services. Subscription-based services are starting to achieve some measure of success, but to date this has been primarily in respect of games outside of the FPS genre.
A number of FPS game tournaments have been held in the past and are still being held from time to time. Two forms of these tournaments namely online and Local Area Network or LAN-based have been employed. Online tournaments are characterised in that players log onto the game server remotely and compete in the game environment against other remotely logged on players through the internet. LAN-based tournaments generally involve the setting up of a large number of game terminals over a Local Area Network (LAN) in a single location and connected to one or a number of game servers. Players then gather at the location to compete. Tournaments are normally structured into a number of rounds, sometimes with regional/conference-style qualifiers. The final rounds of the competitions are normally in a knock-out format in which the last surviving player will be the winner. In both of the above forms of the game it would be expected that less skilled players will be eliminated first and that only the more skilled players will proceed to further rounds. This may discourage less experienced and/or less skilful players from entering the tournaments as their chances of success are very remote if compared to the more experienced, more highly skilled players.
A small number of businesses currently operate tournaments, leagues, and ladders for online and offline game play. The majority of these do not involve any prize money. Where prize money is available, to date, in most cases the amounts are either relatively small or otherwise almost entirely funded by sponsors wishing to use the games as an advertising opportunity.
In the past, companies have tried to more meaningfully monetize the online multiplayer gaming market by launching play-for-money sites. Some of these businesses failed, in part, because there was no differentiation between stronger and weaker players and weaker players were hence discouraged to play the game as they were far more likely to lose money than make money, as indeed proved to be the case. Others failed because not enough players/teams chose to take up the challenges set by other players/teams, since weaker players/teams were almost certain to lose every time. While some players did choose to play against opponents of similar skill levels, the reduced liquidity that resulted from the skill-based segregation of the player base resulted in substantially less revenue generation for the business than might otherwise have been the case.
Apart from FPS games, a number of other websites exist for the playing of other skill-based games such as chess and backgammon for money. Most of these websites employ modified ELO (Árpád Élö) systems as employed for international chess ratings to give ratings to the participants of the games. The ratings are used mostly for the purpose of providing players with adequate knowledge of their skill level relative to their opponents in order that they can select opponents of similar skill levels. Certain such websites also restrict players from selecting opponents whose skill levels are substantially different from their own. Once again, skill-based segregation of the player base will lead to reduced revenue generation opportunities for such businesses and reduced playing opportunities for players.
The above is particularly true with regard to large-scale tournaments, where substantial numbers of players are required in order to build large prize pools. If the player base is always split into separate skill groups, then the possibility of massive tournaments is very substantially reduced. This is a substantial and obvious hindrance to the development of pay-for-play skill gaming as an industry.